Guest blogger Emily Peterson-Cassin of the Bright Lines Project argues that all nonprofits would benefit from a clearer definition of political activity. Transparify does not edit the content of guest blogs; the views expressed in this blog are those of the author alone, and may not reflect the views of Transparify.

Since the U.S. Supreme Court’s 2010 Citizens United decision, 501(c)(4) “social welfare” groups that can collect donations without disclosing their donors have proven irresistible to those looking for ways to spend millions on manipulating elections in secret. Through these groups, corporations and individuals were able to raise and spend more than 300 million dollars in the 2012 election cycle, leaving voters in the dark about their identity and unable to evaluate their motives.

To its credit, the IRS has recognized that this influx of dark money is a problem for its current system of classifying nonprofit entities.In November 2013, it proposed new rules for 501(c)(4)s that garnered more than 146,000 public comments – a record. The proposed rules are problematic for a variety of reasons, including that they don’t do enough to stop the dark money flowing into our elections.

Nevertheless, groups that would be affected by the new rules overwhelmingly want the rulemaking to continue. 67% of organizations commenting or signing on to comments on the rules – the very entities the new rules would most affect –encourage the IRS to move forward in their effort to change the rules governing nonprofits, according to our analysis of the comments.

The existing rules not only have allowed groups to aggressively flout tax rules and pour millions into manipulating elections, but they also have constrained smaller groups dedicated to civic engagement. Too afraid of jeopardizing their nonprofit status, smaller groups have not participated in America’s democracy as fully as they are allowed. The IRS’ new rules seek to fix this imbalance by resolving the ambiguity of the current “facts and circumstances” test. Improving this definition will lead to more clarity for IRS agents as they work to monitor abuses and will help nonprofits engage confidently, knowing with certainty what they can and cannot do.

Currently, 501(c)(3) nonprofits such as think tanks are not allowed to engage in any political activity, and neither the proposed rules nor the Bright Lines Project’s suggested rules would change that.

However, the rules as proposed could jeopardize the daily operations of some 501(c)(3)s by complicating their relationships with (c)(4)s. Unless the same rules apply to all 501’s, organizations that fund or work with (c)(4)s could find that they are engaging in prohibited political activity merely by donating to a (c)(4), or possibly even linking to a (c)(4)’s website.

That’s why the Bright Lines Project has advocated for clear rules that apply to all nonprofits. Bright-line rules have the potential to greatly increase the amount of civic participation think tanks can undertake.

The IRS has a long review process ahead, but should not lose focus on the realities that nonprofits face in navigating the confusion caused by the current rules. The 67% of organizations that want to continue the rulemaking are resoundingly telling the IRS that they have taken a necessary first step. It’s essential that IRS continue the rulemaking and create a final rule that will help bring dark money into the light.

Emily Peterson-Cassin is the project coordinator of the Bright Lines Project, which was formed nearly five years ago to draft and advocate for clearer tax rules governing nonprofits. The project is housed at Public Citizen in Washington, D.C.

Guest blogger David Earley of the Brennan Center argues that think tanks need not worry about proposed new tax rules limiting political activity by nonprofits. Transparify does not edit the content of guest blogs; the views expressed in this blog are those of the author alone, and may not reflect the views of Transparify.

In the wake of the Supreme Court’s 2010 Citizens United decision, political spending by social welfare groups has exploded. These entities, organized under section 501(c)(4) of the tax code, spent 256 million dollars in the 2012 federal elections, even though they are supposed to be operated exclusively for social welfare rather than for political purposes.

Due to legal loopholes, these organizations are not required to disclose their donors. Consequently, individuals, corporations, and unions can anonymously funnel millions of dollars into elections without fear that their identities will be disclosed to the public. This deprives voters of information that would help them interpret the messages they receive before the election and allow them to make informed decisions at the ballot box. And without full disclosure, the public cannot monitor for improper relationships between elected officials and their political benefactors, opening the door to corruption.

Recognizing this abuse of the tax code, the IRS recently proposed new rules to regulate political spending by 501(c)(4) organizations. The rules replace the current, ineffective “facts and circumstances test” with bright-line standards, which benefits both nonprofits and the IRS by clarifying what constitutes political activity. The IRS is also considering adding rules to significantly limit the amount of political spending that nonprofits can undertake. Under current informal IRS guidance, nonprofits can spend up to 49% of their budgets on political activity without endangering their tax exempt status; new rules could greatly reduce this amount. The IRS may also expand the restrictions to other nonprofit entities, such as 501(c)(6) trade associations and 501(c)(5) unions, which also engaged in significant political spending in recent elections.

The new standard for what constitutes political activity should also extend to 501(c)(3) charitable organizations. Because many think tanks are organized under section 501(c)(3), some in these organizations might think this is cause for concern. However, since political activity by 501(c)(3)s is already prohibited entirely, it is unlikely that the new rules will have a significant impact on them – they already are forbidden from getting politically involved in elections. So long as the IRS’s new rules properly define what constitutes political activity, 501(c)(3)s have little to fear.

The IRS should be applauded for moving to rein in political spending by nonprofit groups. As the Brennan Center explained in its comments, “The nonprofit form was created to foster organizations that are devoted to the general welfare of their communities, not to furthering partisan political goals. The proposed IRS rules are needed to help ensure that the nonprofit form is not abused by those who want to anonymously spend massive sums on elections.”

The proposed rules are not without their flaws. For example, the proposed rules consider nonpartisan voter registration – an important type of social welfare work that should be exempt – to be political activity. But these faults are a reason to refine the proposed rules, not to abolish them. The IRS should implement new rules to protect the integrity of both our elections and the tax code.

David Earley is a Counsel at the Brennan Center for Justice at NYU School of Law, a law and policy institute that seeks to improve American systems of democracy and justice. The Brennan Center describes itself as “part think tank, part public interest law firm, part advocacy group, part communications hub”.